Information

Scottish Food and Drink Industry Scheme: legal basis

Outlines the legislation which covers discretionary funding that may be awarded to food and drink enterprises, producer groups and trade organisations.


The national legal basis for the Scheme is The Small Landholders (Scotland) Act 1911 (sections 4 and 6) and The Aquaculture And Fisheries (Scotland) Act 2007 (Section 37), supported by common law powers.

Objectives

This Scheme covers discretionary funding awarded to Food and Drink enterprises, producer groups and trade organisations. The principal objectives of the Scheme are to stimulate growth and strengthen competiveness in the Food and Drink sector and help with aims to make Scotland a Good Food Nation.

General provisions

There is no automatic entitlement to support from Scottish Government (SG) and any funding will be provided on a discretionary basis. Assistance may be offered through a range of instruments, products and services, based on the merits of the proposed project, and an assessment of need for assistance subject to rigorous due diligence appraisal and internal approval by SG.

SG is required to provide returns to UK Government detailing subsidies provided under this Scheme, and to maintain detailed records regarding individual subsidies provided under the Scheme. Such records must contain all information necessary to establish that the conditions laid down in the Regulation are fulfilled. Records must be maintained for 10 years from the date on which the last subsidy was granted under the Scheme. The information which must be provided to SG and/or retained by the subsidy recipient will be set out in any offer of grant made under the Scheme.

The scheme will be administered by Food and Drink Division in the Scottish Government.

Types of subsidy under the Scheme

The information below is intended to summarise the types of subsidy which may be granted under the Scheme. Any award will, however, be subject to assessment against UK Subsidy Control Regulations.

Investment subsidy to SMEs

1. Investment subsidy to SMEs shall be compatible with the internal market.

2. The eligible costs shall be either or both of the following:

(a) the costs of investment in tangible and intangible assets;

(b) the estimated wage costs of employment directly created by the investment project, calculated over a period of two years.

3. In order to be considered an eligible cost, an investment shall consist of the following:

(a) an investment in tangible and/or intangible assets relating to the setting-up of a new establishment, the extension of an existing establishment, diversification of the output of an establishment into new additional products or a fundamental change in the overall production process of an existing establishment; or

(b) the acquisition of the assets belonging to an establishment, where the following conditions are fulfilled:

— the establishment has closed or would have closed had it not been purchased;

— the assets are purchased from third parties unrelated to the buyer;

— the transaction takes place under market conditions.

Where a member of the family of the original owner, or an employee, takes over a small enterprise, the condition that the assets shall be bought from third parties unrelated to the buyer shall be waived. The sole acquisition of the shares of an undertaking shall not constitute investment.

4. Intangible assets shall fulfil all of the following conditions:

(a) they shall be used exclusively in the establishment receiving the subsidy;

(b) they shall be regarded as amortizable assets;

(c) they shall be purchased under market conditions from third parties unrelated to the buyer;

(d) they shall be included in the assets of the undertaking for at least three years;

5. Employment directly created by an investment project shall fulfil the following conditions:

(a) it shall be created within three years of completion of the investment;

(b) there shall be a net increase in the number of employees in the establishment concerned, compared with the average over the previous 12 months;

(c) it shall be maintained during a minimum period of three years from the date the post was first filled.

6. The subsidy intensity shall not exceed:

(a) 20 % of the eligible costs in the case of small enterprises;

(b) 10 % of the eligible costs in the case of medium-sized enterprises.

Subsidy for consultancy in favour of SMEs

1. Subsidy for consultancy in favour of SMEs shall be compatible with the internal market.

2. The subsidy intensity shall not exceed 50 % of the eligible costs.

3. The eligible costs shall be the costs of consultancy services provided by external consultants.

4. The services concerned shall not be a continuous or periodic activity nor relate to the undertaking's usual operating costs, such as routine tax consultancy services, regular legal services or advertising.

Subsidy to SMEs for participation in fairs

1. Subsidy to SMEs for participation in fairs shall be compatible with the internal market.

2. The eligible costs shall be the costs incurred for renting, setting up and running the stand for the participation of an undertaking in any particular fair or exhibition.

3. The subsidy intensity shall not exceed 50 % of the eligible costs.

Subsidy for cooperation costs incurred by SMEs participating in European Territorial Cooperation projects

1. Subsidy for cooperation costs incurred by SMEs participating in the European Territorial Cooperation projects covered by Regulation (EC) No 1299/2013 of the European Parliament and of the Council shall be compatible with the internal

market within the meaning of Article 107(3) of the Treaty and shall be exempted from the notification requirement of Article 108(3) of the Treaty, provided the conditions laid down in this Article and in Chapter I are fulfilled.

2. The eligible costs shall be the following:

(a) costs for organisational cooperation including the cost of staff and offices to the extent that it is linked to the cooperation project;

(b) costs of advisory and support services linked to cooperation and delivered by external consultants and service providers;

(c) travel expenses, costs of equipment and investment expenditure directly related to the project and depreciation of tools and equipment used directly for the project.

3. The services referred to in paragraph 2(b) shall not be a continuous or periodic activity nor relate to the undertaking's usual operating costs, such as routine tax consultancy services, regular legal services or routine advertising.

4. The subsidy intensity shall not exceed 50 % of the eligible costs.

 Subsidy for research and development projects

1. Subsidy for research and development projects shall be compatible with the internal market.

2. The subsidised part of the research and development project shall completely fall within one or more of the following categories:

(a) fundamental research;

(b) industrial research;

(c) experimental development;

(d) feasibility studies.

3. The eligible costs of research and development projects shall be allocated to a specific category of research and development and shall be the following:

(a) personnel costs: researchers, technicians and other supporting staff to the extent employed on the project;

(b) costs of instruments and equipment to the extent and for the period used for the project. Where such instruments and equipment are not used for their full life for the project, only the depreciation costs corresponding to the life of the project, as calculated on the basis of generally accepted accounting principles are considered as eligible.

(c) Costs for of buildings and land, to the extent and for the duration period used for the project. With regard to buildings,

only the depreciation costs corresponding to the life of the project, as calculated on the basis of generally accepted accounting principles are considered as eligible. For land, costs of commercial transfer or actually incurred capital costs are eligible.

(d) costs of contractual research, knowledge and patents bought or licensed from outside sources at arm's length conditions, as well as costs of consultancy and equivalent services used exclusively for the project;

(e) additional overheads and other operating expenses, including costs of materials, supplies and similar products, incurred directly as a result of the project;

4. The eligible costs for feasibility studies shall be the costs of the study.

5. The subsidy intensity for each beneficiary shall not exceed:

(a) 100 % of the eligible costs for fundamental research;

(b) 50 % of the eligible costs for industrial research;

(c) 25 % of the eligible costs for experimental development;

(d) 50 % of the eligible costs for feasibility studies.

6. The subsidy intensities for industrial research and experimental development may be increased up to a maximum subsidy intensity of 80 % of the eligible costs as follows:

(a) by 10 percentage points for medium-sized enterprises and by 20 percentage points for small enterprises;

(b) by 15 percentage points if one of the following conditions is fulfilled:

(i) the project involves effective collaboration:

— between undertakings among which at least one is an SME, or is carried out in at least two Member States, or in a Member State and in a Contracting Party of the EEA Agreement, and no single undertaking bears more than 70 % of the eligible costs, or

— between an undertaking and one or more research and knowledge-dissemination organisations, where the latter bear at least 10 % of the eligible costs and have the right to publish their own research results;

(ii) the results of the project are widely disseminated through conferences, publication, open access repositories, or

free or open source software.

7. The subsidy intensities for feasibility studies may be increased by 10 percentage points for medium-sized enterprises and by 20 percentage points for small enterprises;

Investment subsidy for research infrastructures

1. Subsidy for the construction or upgrade of research infrastructures that perform economic activities shall be compatible with the internal market.

2. Where a research infrastructure pursues both economic and non-economic activities, the financing, costs and revenues of each type of activity shall be accounted for separately on the basis of consistently applied and objectively justifiable cost accounting principles.

3. The price charged for the operation or use of the infrastructure shall correspond to a market price.

4. Access to the infrastructure shall be open to several users and be granted on a transparent and non-discriminatory basis. Undertakings which have financed at least 10 % of the investment costs of the infrastructure may be granted preferential access under more favourable conditions. In order to avoid overcompensation, such access shall be proportional to the undertaking's contribution to the investment costs and these conditions shall be made publicly available.

5. The eligible costs shall be the investment costs in intangible and tangible assets.

6. The subsidy intensity shall not exceed 50 % of the eligible costs.

7. Where a research infrastructure receives public funding for both economic and non-economic activities, a monitoring and claw-back mechanism shall be put in place in order to ensure that the applicable subsidy intensity is not exceeded as a result of an increase in the share of economic activities compared to the situation envisaged at the time of awarding the subsidy.

Subsidy for innovation clusters

1. Subsidy for innovation clusters shall be compatible with the internal market.

2. Subsidy for innovation clusters shall be granted exclusively to the legal entity operating the innovation cluster (cluster organisation).

3. Access to the cluster's premises, facilities and activities shall be open to several users and be granted on a transparent and non-discriminatory basis. Undertakings which have financed at least 10 % of the investment costs of the innovation cluster may be granted preferential access under more favourable conditions. In order to avoid overcompensation, such access shall be proportional to the undertaking's contribution to the investment costs and these conditions shall be made publicly available.

4. The fees charged for using the cluster's facilities and for participating in the cluster's activities shall correspond to the market price or reflect their costs.

5. Investment subsidy may be granted for the construction or upgrade of innovation clusters. The eligible costs shall be the investment costs in intangible and tangible assets.

6. The subsidy intensity of investment subsidy for innovation clusters shall not exceed 50 % of the eligible costs. The subsidy intensity may be increased by 15 percentage points for innovation clusters located in assisted areas fulfilling the conditions of Article 107(3)(a) of the TFEU and by 5 percentage points for innovation clusters located in assisted areas fulfilling the conditions of Article 107(3)(c) of the TFEU.

7. Operating subsidy may be granted for the operation of innovation clusters. It shall not exceed 10 years.

8. The eligible costs of operating subsidy for innovation clusters shall be the personnel and administrative costs (including overhead costs) relating to:

(a) animation of the cluster to facilitate collaboration, information sharing and the provision or channelling of specialised and customised business support services;

(b) marketing of the cluster to increase participation of new undertakings or organisations and to increase visibility;

(c) management of the cluster's facilities; organisation of training programmes, workshops and conferences to support knowledge sharing and networking and transnational cooperation.

9. The subsidy intensity of operating subsidy shall not exceed 50 % of the total eligible costs during the period over which the subsidy is granted.

Innovation subsidy for SMEs

1. Innovation subsidy for SMEs shall be compatible with the internal market.

2. The eligible costs shall be the following:

(a) costs for obtaining, validating and defending patents and other intangible assets;

(b) costs for secondment of highly qualified personnel from a research and knowledge-dissemination organization or a large enterprise, working on research, development and innovation activities in a newly created function within the beneficiary and not replacing other personnel;

(c) costs for innovation advisory and support services;

3. The subsidy intensity shall not exceed 50 % of the eligible costs.

4. In the particular case of subsidy for innovation advisory and support services the subsidy intensity can be increased up to 100 % of the eligible costs provided that the total amount of subsidy for innovation advisory and support services does not exceed 325 000 Special Drawing Rights per undertaking within any three year period.

Subsidy for process and organisational innovation

1. Subsidy for process and organisational innovation shall be compatible with the internal market.

2. Subsidy to large undertakings shall only be compatible if they effectively collaborate with SMEs in the subsidised activity and the collaborating SMEs incur at least 30 % of the total eligible costs.

3. The eligible costs shall be the following:

(a) personnel costs;

(b) costs of instruments, equipment, buildings and land to the extent and for the period used for the project;

(c) costs of contractual research, knowledge and patents bought or licensed from outside sources at arm's length conditions;

(d) additional overheads and other operating costs, including costs of materials, supplies and similar products, incurred directly as a result of the project.

4. The subsidy intensity shall not exceed 15 % of the eligible costs for large undertakings and 50 % of the eligible costs for SMEs.

Subsidy for research and development in the fishery and aquaculture sector

1. Subsidy for research and development in the fishery and aquaculture sector shall be compatible with the internal market.

2. The subsidised project shall be of interest to all undertakings in the particular sector or sub-sector concerned.

3. Prior to the date of the start of the subsidised project the following information shall be published on the internet:

(a) that the subsidised project will be carried out;

(b) the goals of the subsidised project;

(c) the approximate date for the publication of the results expected from the subsidised project and its place of publication on the internet;

(d) a reference that the results of the subsidised project will be available to all undertakings active in the particular sector or sub-sector concerned at no cost.

4. The results of the subsidised project shall be made available on internet from the end date of the subsidised project or the date on which any information concerning those results is given to members of any particular organisation, whatever comes first. The results shall remain available on internet for a period of at least 5 years starting from the end date of the subsidised project.

5. Subsidy shall be granted directly to the research and knowledge-dissemination organisation and shall not involve the direct granting of non-research related subsidy to an undertaking producing, processing or marketing fishery or aquaculture products.

6. The eligible costs shall be allocated to a specific category of research and development and shall be the following:

(a) personnel costs: researchers, technicians and other supporting staff to the extent employed on the project;

(b) costs of instruments and equipment to the extent and for the period used for the project. Where such instruments and equipment are not used for their full life for the project, only the depreciation costs corresponding to the life of the project, as calculated on the basis of generally accepted accounting principles are considered as eligible.

(c) Costs for of buildings and land, to the extent and for the duration period used for the project. With regard to buildings, only the depreciation costs corresponding to the life of the project, as calculated on the basis of generally accepted accounting principles are considered as eligible. For land, costs of commercial transfer or actually incurred capital costs are eligible.

(d) costs of contractual research, knowledge and patents bought or licensed from outside sources at arm's length conditions, as well as costs of consultancy and equivalent services used exclusively for the project;

(e) additional overheads and other operating expenses, including costs of materials, supplies and similar products, incurred directly as a result of the project;

7. The subsidy intensity shall not exceed 100 % of the eligible costs.

Training subsidy

1. Training subsidy shall be compatible with the internal market.

2. Subsidy shall not be granted for training which undertakings carry out to comply with national mandatory standards on training.

3. The eligible costs shall be the following:

(a) trainers' personnel costs, for the hours during which the trainers participate in the training;

(b) trainers' and trainees' operating costs directly relating to the training project such as travel expenses, materials and supplies directly related to the project, depreciation of tools and equipment, to the extent that they are used exclusively for the training project. Accommodation costs are excluded except for the minimum necessary accommodation costs for trainees' who are workers with disabilities;

(c) costs of advisory services linked to the training project;

(d) trainees' personnel costs and general indirect costs (administrative costs, rent, overheads) for the hours during which the trainees participate in the training.

4. The subsidy intensity shall not exceed 50 % of the eligible costs. It may be increased, up to a maximum subsidy intensity of 70 % of the eligible costs, as follows:

(a) by 10 percentage points if the training is given to workers with disabilities or disadvantaged workers;

(b) by 10 percentage points if the subsidy is granted to medium-sized enterprises and by 20 percentage points if the subsidy is granted to small enterprises.

5. Where the subsidy is granted in the maritime transport sector, the subsidy intensity may be increased to 100 % of the eligible costs provided that the following conditions are met:

(a) the trainees are not active members of the crew but are supernumerary on board; and

(b) the training is carried out on board of ships entered in Union registers.

Subsidy for the recruitment of disadvantaged workers in the form of wage subsidies

1. Subsidy schemes for the recruitment of disadvantaged workers shall be compatible with the internal market.

2. Eligible costs shall be the wage costs over a maximum period of 12 months following recruitment of a disadvantaged worker. Where the worker concerned is a severely disadvantaged worker, eligible costs shall be the wage costs over a maximum period of 24 months following recruitment.

3. Where the recruitment does not represent a net increase, compared with the average over the previous 12 months, in the number of employees in the undertaking concerned, the post or posts shall have fallen vacant following voluntary departure, disability, retirement on grounds of age, voluntary reduction of working time or lawful dismissal for misconduct and not as a result of redundancy.

4. Except in the case of lawful dismissal for misconduct, the disadvantaged workers shall be entitled to continuous employment for a minimum period consistent with the national legislation concerned or any collective agreements governing employment contracts.

5. If the period of employment is shorter than 12 months, or 24 months in the case of severely disadvantaged workers, the subsidy shall be reduced pro rata accordingly.

6. The subsidy intensity shall not exceed 50 % of the eligible costs.

Subsidy for the employment of workers with disabilities in the form of wage subsidies

1. Subsidy for the employment of workers with disabilities shall be compatible with the internal market.

2. Eligible costs shall be the wage costs over any given period during which the worker with disabilities is employed.

3. Where the recruitment does not represent a net increase, compared with the average over the previous 12 months, in the number of employees in the undertaking concerned, the post or posts shall have fallen vacant following voluntary departure, disabilities, retirement on grounds of age, voluntary reduction of working time or lawful dismissal for misconduct and not as a result of redundancy.

4. Except in the case of lawful dismissal for misconduct, the workers with disabilities shall be entitled to continuous employment for a minimum period consistent with the national legislation concerned or any collective agreements which are legally binding for the undertaking and governing employment contracts.

5. The subsidy intensity shall not exceed 75 % of the eligible costs.

Subsidy for compensating the additional costs of employing workers with disabilities

1. Subsidy for compensating the additional costs of employing workers with disabilities shall be compatible with the internal market.

2. The eligible costs shall be the following:

(a) costs of adapting the premises;

(b) costs of employing staff solely for time spent on the assistance of the workers with disabilities and of training such staff to assist workers with disabilities;

(c) costs of adapting or acquiring equipment, or acquiring and validating software for use by workers with disabilities, including adapted or assistive technology facilities, which are additional to those which the beneficiary would have incurred had it employed workers who are not workers with disabilities;

(d) costs directly linked to transport of workers with disabilities to the working place and for work related activities;

(e) wage costs for the hours spent by a worker with disabilities on rehabilitation;

(f) where the beneficiary provides sheltered employment, the costs of constructing, installing or modernising the production units of the undertaking concerned, and any costs of administration and transport, provided that such costs result directly from the employment of workers with disabilities.

3. The subsidy intensity shall not exceed 100 % of the eligible costs.

Subsidy for compensating the costs of assistance provided to disadvantaged workers

1. Subsidy for compensating the costs of assistance provided to disadvantaged workers shall be compatible with the internal market.

2. The eligible costs shall be the costs of:

(a) employing staff solely for time spent on the assistance of the disadvantaged workers over a maximum period of 12 months following recruitment of a disadvantaged worker or over a maximum period of 24 months following recruitment of a severely disadvantaged worker;

(b) of training such staff to assist disadvantaged workers.

3. The assistance provided shall consist of measures to support the disadvantaged worker's autonomy and adaptation to the work environment, in accompanying the worker in social and administrative procedures, facilitation of communication with the entrepreneur and managing conflicts.

4. The subsidy intensity shall not exceed 50 % of the eligible costs.

Investment subsidy for local infrastructures

1. Financing for the construction or upgrade of local infrastructures which concerns infrastructure that contribute at a local level to improving the business and consumer environment and modernising and developing the industrial base shall be compatible with the internal market.

2. This shall not apply to subsidy for infrastructures that is covered by other sections with the exception of Regional subsidy. This shall also not apply to airport infrastructure and port infrastructure.

3. The infrastructure shall be made available to interested users on an open, transparent and non-discriminatory basis. The price charged for the use or the sale of the infrastructure shall correspond to market price.

4. Any concession or other entrustment to a third party to operate the infrastructure shall be assigned on an open, transparent and non-discriminatory basis, having due regard to the applicable procurement rules.

5. The eligible costs shall be the investment costs in tangible and intangible assets.

6. The subsidy amount shall not exceed the difference between the eligible costs and the operating profit of the investment. The operating profit shall be deducted from the eligible costs ex ante, on the basis of reasonable projections, or through a claw-back mechanism.

7. Dedicated infrastructure shall not be exempted.

 

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